Gold has been a global symbol of wealth, power, luxury and beauty for thousands of years. The Inca of Peru, for example, used real craftsmanship in turning the shiny metal into fine pieces of jewellery that would become family heirlooms of great emotional significance.
Of course, gold is not only used in the jewellery sector. It also enjoys the status of being a crisis-proof financial investment, originally used to back up national currencies. And in the culinary sector, chefs around the world are experimenting with edible gold, turning their dishes into memorable experiences of glamour and luxury.
Surprising to many people is the fact that gold has extensive applications in the electronics and health sectors, where it is used in computer chips. Hold a smartphone and you’re holding a tiny bit of gold in your hand.
Because of the variety of ways that gold is used, its value has been steadily increasing in recent years. However, despite being perceived as a luxury product associated with wealth and prosperity, the millions of people that mine it struggle to make a decent living.
Artisanal gold and small-scale mining
The artisanal and small-scale gold mining (ASGM) sector has achieved infamous status thanks to its association with conflict minerals. While an issue of great important, conflict minerals are geographically restricted to just a few areas, most prominently the south of the DRC, where militia control mining areas, forcing men, women and children to work in dangerous and undignified working conditions. The income generated through the sale of this gold is used to perpetuate war efforts. This conflict gold then becomes part of the complex and opaque gold-selling sector and is often impossible to trace back to its origin.
ASGM contributes more than 20% of the world’s gold with more than 11 million people employed in the sector. Most of these people have nothing to do with violent conflict yet are consistently overlooked and underserved by national governments, global businesses and the banking sector.
The Impact Facility is fully aware of the challenges that these people face and believes that through positive engagement ASGM can be turned into a viable source of responsible gold and a catalyst for sustainable development of disadvantaged mining communities.
The challenges of artisanal gold mining
The challenges of the sector are wide ranging and can differ geographically due to national laws, availability of resources such as water, and competition with other livelihoods such as farming. In our engagement with the mines, we try to address the issues that are specific to the operation at hand.
THREE FUNDAMENTAL PROBLEMS
Widespread child labour
Mines resort to cheap child labour to make unmechanised mining financially viable. Children are employed to excavate ore from inaccessible places, and transport, wash and sort it once it has been brought to the surface. Aside from health and safety risks, child labour takes children out of education and forces them to stay in poorly paid, unskilled labour.
Lack of formalised businesses
Legislation and regulation for mines is often vague or absent, and mines struggle to operate legally. Pushed to the fringes of the formal economy and excluded from formal finance arrangements, mines are forced to engage with illegal traders for short-term finance in return for discounted gold.
Uncontrolled use of mercury in the gold production process
Mercury is used to extract gold from ore. While cheap and accessible, it’s extremely poisonous. Exposure during pregnancy causes miscarriages, affecting foetal brain development and leading to severe disabilities in children. Mercury use is illegal in many countries but mines are often unaware of its toxicity, and lack both the expertise and the capital for economically viable alternative processing methods.
Our solutions-focused approach
Issues such as child labour and environmental degradation are complex to solve and require a holistic, landscape approach.
Rendering child labour obsolete by boosting family incomes and introducing mechanisation
In return for equipment and access to markets, our partner gold mines commit to continuous improvement of their mining operations, including banning children from mine sites. Having access to more efficient machinery means that mine operators can pay workers living wages so families are no longer dependent on additional income from child labour. And mine operators’ need for cheap unskilled labour decreases as mechanisation – requiring trained adult workers – increases.
Driving formalisation through continuous improvement
By offering urgently-needed capital – downstream investor and grant money – to mines committed to continuous improvement, we drive the formalisation of mining communities. This boosts efficiency and brings about health and safety improvements.
Investing in mercury-free and reduced-mercury processing equipment to boost profits
Through our asset financing scheme, mines get the ore processing equipment that enables them to significantly reduce or eliminate mercury use, protecting mine worker health while optimising gold recovery which boosts production and profitability.
Read more in our blog: Spotlight on Mercury.
Facilitating inclusive and constructive ASGM engagement by downstream companies
As we engage with mining communities directly, we can guarantee that gold produced at any of our partner mines is conflict-free. We provide downstream companies with assurances that gold sourced from our partner mines is fully traceable and regularly assessed. At the same time, mines receive capacity-development support to gradually adopt international best practices around organisational management and governance, worker rights and environmental stewardship.